No. 1: Redpine deal ends up in court

Published: Monday, December 31, 2012 at 01:36 PM.

Lawsuit

In March, the county and state jointly filed a lawsuit against Redpine in an attempt to recover the $750,000. The entities amended the lawsuit in November to include CEO Shad Wheeler.

About two weeks after the commission voted 5-0 to give Redpine the money, the county deposited $350,000 into the company’s checking account on July, 15, 2011, according to the lawsuit. The Department of Economic Opportunity deposited $400,000 into Redpine’s checking account Aug. 31, 2011.

The lawsuit alleges Wheeler was a driving force of duplicity. He leased only 12,000 square feet for the corporate headquarters instead of the 30,000 square feet he promised, and the lease started Sept. 1, 2011, though he said corporate operations would begin in July.

Also, the day the county’s $350,000 hit the company checking account, Wheeler transferred $15,000 of it into his personal account, according to the lawsuit.

Additionally, the lawsuit claims Redpine paid Roland Wheeler, chairman of the board and Shad’s father, $82,172 from the state and county funds. And Redpine used $87,000 to repay corporate debt.

Editor’s Note: The News Herald has been publishing its annual countdown of the top 10 stories of the year. These were the stories editors thought were the most important in Bay County in 2012.

Top 10 of 2012

l DEC. 23: 10. RESTORE Act passes

l DEC. 24: 9. Schools privatize food services

l TUESDAY: 8. Mexico Beach Police embroiled in scandal

l WEDNESDAY: 7. Washington County approves slot machines

l THURSDAY: 6. Callaway mayor dies

l FRIDAY: 5. Panama City Rescue Mission move

l SATURDAY: 4. Bay Medical goes private

l SUNDAY: 3. Airport advancements

l MONDAY: 2. F-22 problems persist

l TODAY: 1. Redpine deal ends in court

PANAMA CITY — Fallout from the Redpine debacle grabbed headlines in 2012, as government entities took the chiropractic billing software company to court, trying to recoup their $750,000 loss.

Despite some reservations the Bay County Commission approved giving Redpine Health Care Technologies Inc. $350,000 upfront in 2011, a move the Bay Economic Development Alliance (EDA) encouraged. The Florida Department of Economic Opportunity provided another $400,000 about a month later, before any of Redpine’s predicted 410 jobs were created. The money was meant to induce the company to relocate its headquarters from Spokane, Wash., to BayCounty.

But by Dec. 5, 2011, the company’s BayCounty office was closed, and only five of a promised 44 jobs for 2011 had materialized. Since then, the corporation has been dissolved.

Back in 2011, Janet Watermeier, then-EDA executive director, helped Redpine adjust its grant application to make the company more attractive, according to public records. She encouraged Redpine to give a high estimate on how many jobs the company would create.

Watermeier left the EDA at the end of 2011 and now doesn’t want to discuss Redpine. She declined to comment for this story, adding that she was under a confidentiality agreement, and directed questions to the EDA.

“I’m not going to talk because it’s not appropriate for me to say anything one way or another,” she said.

Current executive director Neal Wade did weigh in, saying the biggest change since he took the helm in early January is EDA’s approach to recommending projects to the commission for grant money.

Wade said EDA now has a vetting committee — comprised of an accountant, a banker and a lawyer — which goes through each project’s financials and gives consensus approval before it goes the commission. The committee didn’t exist when Redpine went through.

“If we don’t believe that it’s a worthy project, we don’t take it forward,” he said.

Perhaps the most important change is the no-money-upfront policy. Now all of the projects and accompanying grant money are performance-based, Wade said.

“Redpine was paid upfront. That’s not going to happen again,” he said, adding, “I think because it is performance-based the taxpayer is protected.”

The new criteria requires the company to create jobs and maintain them a year before receiving the economic incentive, Wade said. That’s the position the state has taken and so have local entities, he said.

Wade said it would be an exceedingly rare situation, like a top 10 global company coming to the area, for EDA to recommend upfront money again.

Wade said the EDA is taking a cautious approach on projects. He said if Redpine never happened, he still would have instituted the same safeguards. He said the EDA must do its homework on these projects before they go before the commission.

“I want to be very conservative,” he said.

Lawsuit

In March, the county and state jointly filed a lawsuit against Redpine in an attempt to recover the $750,000. The entities amended the lawsuit in November to include CEO Shad Wheeler.

About two weeks after the commission voted 5-0 to give Redpine the money, the county deposited $350,000 into the company’s checking account on July, 15, 2011, according to the lawsuit. The Department of Economic Opportunity deposited $400,000 into Redpine’s checking account Aug. 31, 2011.

The lawsuit alleges Wheeler was a driving force of duplicity. He leased only 12,000 square feet for the corporate headquarters instead of the 30,000 square feet he promised, and the lease started Sept. 1, 2011, though he said corporate operations would begin in July.

Also, the day the county’s $350,000 hit the company checking account, Wheeler transferred $15,000 of it into his personal account, according to the lawsuit.

Additionally, the lawsuit claims Redpine paid Roland Wheeler, chairman of the board and Shad’s father, $82,172 from the state and county funds. And Redpine used $87,000 to repay corporate debt.

“The majority of the remaining state/county funds were used to pay Shad Wheeler and other Redpine Spokane employees’ salaries and wages between June and December 2011,” the lawsuit said.

Redpine’s corporate “relocation advisor” received $119,852 between July 19, 2011, and Sept. 2, 2011, according to the lawsuit.

Neither the state nor the county would comment about the ongoing lawsuit.

“On any other DEO topic I’d be happy to chat with you, but because the Redpine case is currently in litigation, I won’t be able to discuss anything about it,” James Miller, spokesman for the Department of Economic Opportunity, said in an email.

County spokeswoman Valerie Sale said the state and county are working to recoup the $750,000 through the lawsuit, but she could not comment further because the litigation is ongoing. The county commissioners and other countyofficials declined to comment.